Wednesday, 14 March 2007 01:30

Ask Dale March 2010

Written by Dale Delmege

The dealer owner where we buy most of our parts for a certain line of cars approached us with a proposition. In return for an extra discount on parts, he wants us to pass along customer names as new car sales prospects. Anything wrong with that?

Not for the dealer. He’s entitled to use whatever information he can dig up. But without the customer’s unequivocal prior permission it’s a foolish risk for you, no mater what the additional discount is worth. Your knowledge of the customer’s identity is not your property to use to your benefit. In any case, in this age of privacy sensitivity, sooner or later a customer will claim to have been damaged somehow by your “unauthorized” disclosure. Incidentally I know of some DRP’s where even a first offense in this department will result in immediate and irreversible termination.

Our competitor seems to have just about all the city and county vehicle collision repair business pretty well locked up. Does this traditionally go up for bids? How do we go after it?

Don’t you have enough in your life to depress you already? This is highly political, low-profit, low-quality, shop-clogging business. Unless you like doing $2000 jobs for $1600, leave it to the guys that fix taxis.
Try this instead: Go make some good sales calls on the HR departments of at the one or two non-profit agencies in your area with the most employees. Provide them with special cards for them to give their employees that will produce an automatic $10 or $25 contribution to the agency for each employee’s car fixed at your shop.

Dale, Settle a bet. My brother says me driving my most expensive car to my shop every day makes the employees resentful. I say that good employees are motivated by seeing the material benefits of hard work.

You lose. I hope you bet him the car.

We have been a dues-paying member of our state trade association for many years. It’s been beneficial learning and sharing best practices. But recently the association has become very aggressive politically, hiring a lobbyist to confront insurers with the Insurance Commissioner and publishing “consumer education” materials that have an anti-insurer flavor. Is our membership going to cost us business?

Not unless you’re a conspicuous spokesman for the new aggressiveness. But at some point you will have to ask yourself whether everyone your dues are supporting are worthy fellow members of your profession. If you can’t remember the last time your association kicked out somebody for not being up to its standards, what’s the point of being part of it?

We used to belong to a paint company “20 group” where we compared numbers three or four times a year. What are considered good basic operating numbers these days?

Circumstances and regions vary, of course, but you really need to be at least in the low 40’s at the gross margin line to have enough left over for sufficient retained earnings to keep strengthening the business. Nobody on the property should be cashing a bonus check for a month below 40%. With margins on parts typically below 30%, you need your gross margin on direct labor at 60% or more including benefits. Also, if your paint & materials sales are less than 10% of total sales in any quarter, your estimators need some more training. Indirect labor needs to be at or below 12% of sales, and rent shouldn’t get much beyond 5% of sales unless you’re the landlord. Get back in a 20-group, but pick critically. They range from pointless to priceless.

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